Stiff competition and high returns in the local insurance sector, are expected to attract more foreign interest this year as firms jostle for a piece of the Kenyan market.
ABC Capital’s Insurance sector report on the country, says the sector’s average returns of about 20 per cent and a low penetration level of 3 per cent, will be a strong pull for investors seeking higher returns amidst trends of economic shocks in other sectors.
“In 2016, we are anticipating to see more abrasive acquisitions and investments in the insurance industry. Cut-throat competition among underwriters has fuelled quest for funds, making the sector a fertile ground for investors seeking to boost clout or make fresh entry into the market.” ABC says in the report.
VITAL GROWTH OPPORTUNITY
The insurance sector outlook also portrays Kenya as a vital growth opportunity in a fast-developing market and an opening to the East African Community.
Kenya’s insurance industry has seen a lot of foreign interest from various regions with some of the recent entries including Allianz from Germany, Sham Finances, Old Mutual and Swiss Re.
Mergers, acquisitions and restructuring activities have characterised the entry formulas for foreign investors. In July 2015, Real Insurance Company was acquired by British-American Investments Company Limited while Pan Africa insurance bought 51 per cent stake into Gateway Insurance to grow its general business line in March.